What legal protections and defenses can religious organizations rely on in today’s environment?

This White Paper reviews the constitutional, statutory, and case law defenses available to religious organizations. It explains church autonomy, the ministerial exception, Title VII exemptions, and labor law considerations. It also examines recent rulings such as Hosanna-Tabor and Hobby Lobby, plus the “World Vision Test,” showing how courts assess religious character. Practical guidance is given for drafting bylaws, job descriptions, and policies that preserve religious identity while reducing litigation risk.

White Paper

Legal Defenses for Religious Organizations

Theresa Lynn Sidebotham, Esq.
Hugh Jones, Esq., Charity Counsel

Telios Law PLLC
Theresa Lynn Sidebotham, Esq.
tls@telioslaw.com; 855-748-4201

Charity Counsel
Hugh Jones, Esq.
hugh.jones@charitycounsel.org; 719-291-6242

Table of Contents

1. Executive Summary
2. The Special Position of Religious Organizations
3. The Value of Being a Religious Organization
4. Religion-Based Exemptions to Title VII
5. Another Religious Analysis: The National Labor Relations Board
6. The World Vision Test
7. Hobby Lobby Permits Religious Expression by Corporations
8. Implications of Secondment Policies and Other Employment Arrangements
9. I. The Special Position of Religious Organizations
10. II. The Value of Being a Religious Organization
    1. A. Controlling Doctrine
    2. B. Choosing Leadership
    3. C. Termination and Discipline of Members
    4. D. Issues with Sexual Morality, Including Homosexuality
    5. E. Defamation
    6. F. Labor Issues
    7. G. Privilege Issues
11. III. Religion-Based Exemptions to Title VII
12. IV. Another Religious Analysis: the National Labor Relations Board and Religious Schools
13. V. The World Vision Test
14. VI. Hobby Lobby Permits Religious Expression by Corporations
15. VII. Implications of Secondment Policy and Other Employment Arrangements
    1. A. Secondment from Other Organizations
    2. B. Employed Staff Overseas
16. VIII. Secular Public Profile v. Religious Personality
17. IX. Possible Approaches

Executive Summary

Religious organizations in the United States have various religion-based exemptions and defenses. First, they have broad constitutional and statutory rights. These rights provide religious organizations various freedoms to carry out their mission, and defenses to claims against them. While there is no one formal test to define a religious organization, Title VII’s two exemptions are helpful to consider because they apply to a broad variety of employment discrimination disputes. We also review a test with similar factors developed in National Labor Relations Board cases, and the Hobby Lobby and World Vision tests. Then we discuss possible approaches.

The Special Position of Religious Organizations

• The “church autonomy” doctrine means the government may not inquire into an institution’s religious beliefs or intervene in theological disputes.
• Religious organizations have statutory protections as well.

The Value of Being a Religious Organization

• Religious organizations determine their own doctrine without court interference.
• Religious organizations choose their own leadership, under the “ministerial exception.”
• Religious doctrines can state positions about sexual morality.
• Religious organizations have some protection from labor unions.
• Religious organizations can claim certain privileges for confidentiality.

Religion-Based Exemptions to Title VII

• Title VII allows religious organizations, including religious educational organizations, to hire selectively by religion.

Another Religious Analysis: The National Labor Relations Board

• Religious colleges and universities have some protection from NLRB jurisdiction.

The World Vision Test

• Under the World Vision test, religious organizations face increasing pressure to prove they qualify for the Religious Employer Exemption.

Hobby Lobby Permits Religious Expression by Corporations

• Under Hobby Lobby, even secular corporations can exercise religious expression within certain limitations, as they are protected by federal and state RFRA laws.

Implications of Secondment Policies and Other Employment Arrangements

• Secondment Agreements can support the religious character of a mission, but Agreements need to be carefully drafted.

I. The Special Position of Religious Organizations

In the United States (and some other countries), religious organizations may claim strong legal protections. The U.S. Supreme Court has insisted that “religious organizations have an interest in autonomy in ordering their internal affairs, so that they may be free to . . . select their own leaders, define their own doctrines, resolve their own disputes, and run their own institutions.”¹ First, these protections help the organization maintain its religious nature, when it would otherwise be forced to compromise on certain principles. Second, they add a layer of protection against claims in litigation, in the form of defenses that may permit early dismissal of lawsuits.

The First Amendment requires that the government neither handicap nor favor religion.² “In certain circumstances, the First Amendment precludes a court from exercising jurisdiction over claims concerning a religious institution’s activities on matters of religious doctrine or authority.”³ A line of cases originating with Watson v. Jones, 80 U.S. 679 (1871), and continuing with Jones v. Wolf, 443 U.S. 595, 609 (1979), teaches that when decisions of religious organizations involve their theological principles, the courts will not intervene. This is generally referred to as the “church autonomy” doctrine.

It is unnecessary and offensive for courts to inquire into an institution’s theological principles, it being well established that “courts should refrain from trolling through a person’s or institution’s religious beliefs.”⁴ Moreover, a court may not properly “subject the institution to questioning about its motives or beliefs,” nor may it “ask about the centrality of beliefs or how important the religious mission is to the institution.”⁵ In short, “religious beliefs need not be acceptable, logical, consistent, or comprehensible to others to merit First Amendment Protection.”⁶

In addition to the broader constitutional principles established in case law, a matter may fall under the federal Religious Freedom Restoration Act, or your state may have a Religious Freedom Act (mini-RFRA). While there is not a special test for religious organizations under RFRA, and thus, its specific applicability is not discussed in detail, it changes the standard of scrutiny and makes a free exercise defense much easier to assert.

Title VII has also carved out religious exemptions, which we will discuss in detail.

II. The Value of Being a Religious Organization

The religion-based exemptions and defenses help the organization preserve its religious character in many ways. Because of these principles, organizations are permitted to base their policies and disciplinary procedures on their own moral and spiritual beliefs. The “ecclesiastical abstention” doctrine prevents secular courts from reviewing any disputes that would require an analysis of “theological controversy, church discipline, ecclesiastical government, or the conformity of the members of the church to the standard of morals required.”⁷ “In cases relying on the ecclesiastical abstention doctrine, courts consider the substance and nature of the plaintiff’s claim to determine whether the First Amendment prevents subject matter jurisdiction.”⁸

When a religious organization faces potential claims such as wrongful termination, loss of membership, defamation, or negligent supervision with respect to a disciplinary investigation, numerous religious law and constitutional principles apply in addition to ordinary legal principles. These legal principles make ordinary lawsuits against religious organizations difficult—and are intended to do so—because of the religion clauses of the First Amendment as provided for in the U.S. Constitution. Thus, the United States has a strong legal tradition that the judiciary should not interfere with the Free Exercise actions of religious organizations. In fact, the secular courts apparently accommodate the Scriptural principle that believers should properly resolve their disputes within their own organizations and outside the courts.

Because of these principles, many nondiscrimination statutes and requirements, whether related to employment or not, do not apply to religious organizations. Title VII is the most important of these. This protection applies not only to the viability of various claims, but also to the process of litigation. For instance, documents and testimony may potentially be protected as privileged under religious defenses.

A. Controlling Doctrine

A religious organization can require religious belief and compliance with certain doctrines from its members or employees, while a secular organization cannot. Courts will not interfere with doctrinal issues, or decisions related to doctrinal issues. For instance, the court dismissed claims based on the excommunication of a Catholic newspaper publisher, who was excommunicated for associating with a schismatic group.⁹

B. Choosing Leadership

For centuries, religious groups’ right to control the selection of their leaders has been crucial to securing religious liberty for all. “The ultimate authority of religious organizations to select and supervise their leaders has been vital to the development of institutional religious freedom.”¹⁰ From “the investiture controversy of the eleventh and twelfth centuries, in which popes and monarchs fought over who would have the authority to appoint Catholic bishops”¹¹ to President Thomas Jefferson’s letter to the Ursuline Sisters of New Orleans, assuring the religious order that “the Louisiana Purchase would not undermine their legal rights,” including the order’s right “‘to govern itself according to its own voluntary rules without interference from the civil authority,’” religious groups’ ability to be free to choose their leaders has been a basic component of religious liberty.¹²

A long tradition of constitutional law protects the rights of religious institutions to select their religious leaders.¹³ It has developed a doctrine called the “ministerial exception.” If the person in question is an employee in a ministerial position, the ministerial exception gives religious institutions an affirmative defense to an employment discrimination lawsuit.¹⁴ The general rule is that persons fit the ministerial exception if their primary job functions serve the spiritual and pastoral mission of the organization, whether or not they are ordained. Persons would fail to be included under this exception only if their positions were purely custodial or administrative, with no spiritual function.¹⁵

The ministerial exception has recently been strongly affirmed by the U.S. Supreme Court.¹⁶ In Hosanna-Tabor, the government tried to enforce federal nondiscrimination laws related to disability, but the court rejected the government’s argument that nondiscrimination laws could be enforced as to choice of ministers. The Court said that because religious groups’ “very existence is dedicated to the collective expression and propagation of shared religious ideals,” when “it comes to the expression and inculcation of religious doctrine, there can be no doubt that the messenger matters.”¹⁷ Obviously, “[a] religion cannot depend on someone to be an effective advocate for its religious vision if that person’s conduct fails to live up to the religious precepts that he or she espouses.”¹⁸

C. Termination and Discipline of Members

A religious organization can use religious standards for the termination and discipline of its members, which gives it much more freedom than under ordinary employment law principles.

The religious organization in question need not be a church, but can be an educational institution.¹⁹ First Amendment protection is available when a “religious organization” makes an “ecclesiastical decision.”²⁰ The courts will not interfere with alleged wrongs within an ecclesiastical setting, even if the administrative remedies are inadequate, because of the preservation of free exercise.²¹ The civil court cannot interfere with the internal governance of a religious organization, even to determine whether it complied with its own procedural rules.²²

For instance, in Hutchison v. Thomas, a minister argued that his enforced retirement was improper because the church had wrongfully applied its rules or doctrinal statements, and there had been fraud and misrepresentation.²³ The court refused to intervene in the dispute, finding it could not interfere in areas of church discipline, faith, and organization.

D. Issues with Sexual Morality, Including Homosexuality

These principles extend to issues of sexual morality, including those encompassed in nondiscrimination law. In most jurisdictions, Title VII does not include discrimination based on sexual orientation or alternative lifestyles, though the EEOC is attempting to take the position that it does. However, the Seventh Circuit, which covers Illinois, Indiana, and Wisconsin, has concluded that discrimination on the basis of sexual orientation is a form of sex discrimination under Title VII.²⁴

In addition, many state and local ordinances target discrimination based on sexual orientation, transgender issues, and other similar problems. Many of these statutes have an exception for religious organizations, though even if they do not, the organization may be able to claim overarching constitutional protections.

In Ogle v. Church of God, a minister of 22 years was accused of homosexual conduct.²⁵ He was placed under discipline, and various letters were written about him. A full investigation was carried out, and he was disciplined. He sued on a number of counts related to the disciplinary process. The court declined to become involved in the internal policy, administration, and disciplinary practice of the organization. Those who join a religious organization “do so with an implied consent to this government, and are bound to submit to it.”²⁶ It is not proper for such individuals to appeal to secular courts to have these decisions reversed. Nor is it proper to have such a court inquire into whether the decisions of the religious organization are “arbitrary” or carried out correctly.

Other cases are similar. In one case, the Christian Science Monitor, a church-affiliated publication, terminated an employee because of her sexual preference, and was protected in its decision.²⁷ In a church case, a decision to discipline a church member for fornication, by reading her name out loud and withdrawing her from fellowship, was also protected from court interference under the First Amendment.²⁸

We expect growing challenges in this area since the recent Obergefell decision, that held that same-sex couples had a fundamental right to marry.²⁹ Presently, religious organizations have a window of time to define their religious character and moral standards carefully so that they are prepared to mount a defense either based on exemptions in the law, such as the one above, or on constitutional grounds.

E. Defamation

Religious organizations have a privilege to make certain statements in the context of discipline, with respect to both their employees and their members. It would be a violation of the First Amendment to allow defamation actions to be based entirely upon statements made within a religious organization, before its recognized leadership, and under its disciplines.³⁰

Typically, when “defamatory” statements are made as part of a religious employment decision, the court has no subject matter jurisdiction over the statements. Commonly, these statements are completely protected by the Free Exercise clause when (1) they flow from an employment dispute in the religious organization; (2) the “publication” is confined within the church; and (3) there are no egregious circumstances.³¹ In such a situation, the court will dismiss claims of libel and slander brought by church members.³² One case related to an investigation held that there was no subject matter jurisdiction over defamation claims related to statements made in connection with an investigation and disciplinary process, when the statements were made within the confines of the church.³³

When a religious organization disciplines its members for behavior inconsistent with the beliefs of the organization, such as immoral behavior, protections for the organization are very strong, not only to discipline but also to discuss the matter. With the church member who committed fornication, one court found complete First Amendment protections for the actions of the Elders that took place while she was still a member of the church.³⁴ Up to that time, she had at least implicitly agreed to submit to the discipline of the religious organization, including any publication of discipline to the congregation that was according to the known tenets of the organization, and the organization had an absolute privilege to discuss the matter.³⁵

In Schoenhals v. Mains, members of a church were expelled, and a detailed list of their shortcomings was read to the entire congregation.³⁶ They sued for defamation. The court refused to consider doctrinal matters raised in the lawsuit. It also refused to consider matters supposedly unrelated to doctrine, because “[e]xamination of those reasons and motives would also require an impermissible inquiry into Church disciplinary matters.”³⁷ In addition, the fact that the letter was disseminated only to members of the church showed that the statements involved organizational discipline. Therefore, the defamation claim was barred by the First Amendment.

F. Labor Issues

Being a religious organization can provide protection against being involved with labor unions. In one case, the district court determined that a university was subject to the National Labor Relations Board, which could require it to recognize a Union as a collective bargaining agent.³⁸ Initially, the NLRB decided that the University’s purpose and function were primarily secular, and ordered that the University accept the Union. The court objected to the NLRB’s analysis of whether the school had “substantial religious character,” because it was too intrusive. Instead, it applied a simpler test to determine that the NLRB had no jurisdiction.

As discussed in more detail in the sections that follow, the NLRB continues to attempt to exercise jurisdiction over religious colleges and universities in particular, and has developed its own test for whether it will be successful.

G. Privilege Issues

In addition to ordinary privilege protections in litigation, such as attorney-client privilege, religious organizations have additional privileges. Most clergy or pastoral counseling is shielded by the First Amendment, and because of theological views held by churches, pastoral counselors likely do not have the same duty of care that secular therapists have.³⁹ The clergy communications privilege is broadly recognized, and the courts usually respect the privilege of information given under this privilege.⁴⁰ The church autonomy doctrine, which gives religious organizations autonomy in their own internal affairs, may in some cases protect the confidentiality of documents and communications.⁴¹

III. Religion-Based Exemptions to Title VII

Since 1964, Title VII has made it unlawful for employers in the United States to discriminate on the basis of religion (among other protected characteristics).⁴² The law, however, expressly exempted religious organizations.⁴³ Indeed, religious organizations have always been entitled to make employment decisions on the basis of religion, as without this right it would be impossible for them to maintain their religious character and mission. The provision in Title VII that expressly exempts religious organizations (the “Religious Employer Exemption”) now provides as follows:

[Title VII] shall not apply . . . to a religious corporation, association, educational institution, or society with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.⁴⁴

In 1987, the U.S. Supreme Court confirmed the constitutionality of the Religious Employer Exemption after concluding that it serves the purpose of “alleviating significant governmental interference with the ability of religious organizations to define and carry out their missions.”⁴⁵

Educational organizations that are subordinate to religious organizations are also expressly exempted from religious discrimination under Title VII. This exemption was added to the law as an amendment because, in the view of the amendment’s sponsor, Representative Graham Purcell of Texas, Title VII did not adequately exempt “church-affiliated schools and colleges.”⁴⁶ The amendment exempting subordinate educational organizations (the “Subordinate Educational Organization Exemption”) provides as follows:

it shall not be an unlawful employment practice for a school, college, university, or other educational institution or institution of learning to hire and employ employees of a particular religion if such school, college, university, or other educational institution or institution of learning is, in whole or in substantial part, owned, supported, controlled, or managed by a particular religion or by a particular religious corporation, association, or society . . . .⁴⁷

Representative Purcell was rightly concerned about church-affiliated schools and colleges, as the original version of the Religious Employer Exemption protected only the “religious activities” of religious organizations and not their charitable, educational, and other activities.

In 1972, though, the Religious Employer Exemption was substantially broadened to exempt all the activities of religious organizations (this is the version shown above). For educational organizations, the broadened language allowed them to more easily qualify for the Religious Employer Exemption if they had sufficient religious character. It also rendered the Subordinate Educational Organization Exemption a backup argument for many schools, colleges, and universities for which religion was part of their character and mission and not only part of their founding.

The analysis of whether an institution qualifies for the Subordinate Educational Organization Exemption may be complex, and should be addressed by legal counsel.

IV. Another Religious Analysis: the National Labor Relations Board and Religious Schools

Analysis of the religion issue developed a little differently under National Labor Relations Board cases. When the NLRB tried to take jurisdiction over a group of Catholic schools, on the basis that they were not “completely religious,” just “religiously associated,” the United States Supreme Court was not impressed.⁴⁸ The Court held that resolving labor charges might “necessarily involve inquiry into the good faith of the position asserted by the clergy administrators and its relationship to the school’s religious mission.”⁴⁹ Because of these conflicts, the Court declined to construe the National Labor Relations Act to give the Board jurisdiction over the religious schools.

One circuit came up with a three-part test to apply to NLRB cases. Under this test, a school is exempt from jurisdiction if it: (1) holds itself outside as providing a religious educational environment; (2) is organized as a nonprofit; and (3) is “affiliated with, or owned, operated, or controlled, directly or indirectly, by a recognized religious organization, or with an entity, membership of which is determined, at least in part, with reference to religion.”⁵⁰ This test would also be useful in cases that are not under the NLRB.

The NLRB has also adopted its own test for whether it will exercise jurisdiction over religious schools. The NLRB will exercise jurisdiction over faculty members at a religious university unless the school demonstrates two factors: (1) it holds itself out as providing a religious educational environment, and (2) it holds the faculty in question out as performing a specific role in creating or maintaining the university’s religious educational environment.⁵¹

V. The World Vision Test

Religious organizations are facing increasing pressure. Who would have predicted only 10 years ago that in 2009, the Ninth Circuit Court of Appeals would decide by two judges to one that World Vision was barely religious enough to qualify for the Religious Employer Exemption? By “just barely,” we mean that World Vision only qualified because it “does not engage primarily or substantially in the exchange of goods or services for money beyond nominal amounts.”⁵² In other words, if World Vision had sold books, used items, or medical services, or had charged tuition, then it apparently would not have qualified. In that event, the organization would have owed substantial damages to three employees whom it fired after they informed the organization that they no longer believed in the deity of Jesus Christ.

The test in Spencer v. World Vision asked whether the entity engaged in the exchange of goods and services beyond nominal amounts. The term “nominal” is not defined. This test creates particular complications for those organizations in the Ninth Circuit, but so far has not been followed in other circuits.

VI. Hobby Lobby Permits Religious Expression by Corporations

Hobby Lobby centered on whether certain regulations promulgated by the Department of Health and Human Services (HHS) under the Patient Protection and Affordable Care Act of 2010 (ACA), which required employers to furnish certain contraceptive services, violated the rights of three closely held corporations under the Religious Freedom Restoration Act (RFRA).⁵³ The companies objected to offering contraceptive services they considered to be abortifacients, and claimed that paying for such services would violate their sincerely held religious beliefs.

In a 5–4 decision, the U.S. Supreme Court held:

the regulations that impose this obligation violate RFRA, which prohibits the Federal Government from taking any action that substantially burdens the exercise of religion unless that action constitutes the least restrictive